February 15, 2008

Good Old Bozos

Senators
Leahy and Hatch, in a
Washington Times
editorial, cry wolf about the need for patent reform, dishing out fallacious logic and
rummy rumor posing as fact. "Meaningful patent reform is crucial to America's
ability to maintain its competitive edge in the world," they toot, without
evidentiary basis or rational reasoning matching perceived problem to proposed
solution.

The senators, money sots and shills in reality, pose as academics.

The Patent Reform Act of 2007 (S.1145) is the product of years of
deliberation and study within Congress and by many esteemed agencies and
institutions, including dozens of hearings with the testimony of scores of
witnesses, extensive and substantive mark-up sessions, and hundreds of meetings
and discussions with countless stakeholders representing a sweeping array of
interests in the patent system.

If their legislation is, as they proclaim, the product of study, it is, as we
shall see, a profile in sheer incompetence: an utter inability to critically
analyze the current situation, or even develop a rational solution to what is
perceived to be a problem, leaving aside that much of the legislation comprises
screwy solutions without corresponding problems.

Think about this: The last time the patent system was significantly
changed, the structure of DNA had not been discovered; gasoline was around
27 cents a gallon; and we had not yet sent a man to the moon. Our economy is
no longer defined by assembly lines and brick-and-mortar production; we are
living in the Information Age, and the products and processes that are being
patented are changing as quickly as the times themselves. Unfortunately,
Congress has neglected to modernize our patent system to keep pace with the
boom in American innovation.

The above argument equates technology change with a need for legal change.
Think about this: the processes of patent grant and enforcement are technology
independent. Their analogy is prima facie spurious.

In 2003, the Federal Trade Commission reported that patents of
questionable validity were inhibiting innovation and competition, harming
consumers and businesses and our overall economy. The FTC further found that
relying on court battles to challenge questionable patents was unduly costly
and cumbersome. To address this problem, our bill would set up an
administrative, post-grant review procedure. This would not only cut down on
legal costs for the patent holder and the patent challenger, but it would
also leave the issue to those best equipped to review patents -- the experts
at the U.S. Patent and Trademark Office.

The FTC report failed to show consensus, and had no factual basis for its
recommendations, other than anecdotal accusation. The FTC report offered zero
statistical analysis. An
objective analysis of the FTC report found: "Despite no evidence, the FTC
report concludes that poor quality patents are being issued and urges a number
of reforms to address the potential problems."

And then there's the proposed solution: the same clowns that supposedly
created the mess, the USPTO, are going to clean it up, by instituting a largely
redundant procedure to the current reexamination regime. No reason has been
cited, no justification found, that a freshly minted patent should immediately
be subjected to open-season pot shots, at patent holder expense, and by the same
body that just gave the green light. The senators are living in the past if they
are not aware of the heightened examination regime in force now at the PTO, with
KSR as a magic damnation wand. An objective observer would inexorably be led to
a singular conclusion: they are smoking the good stuff up on the Hill.

If the cost of litigation is such a concern, a lower-cost alternative to
infringement analysis, not just validity analysis, is required.

We must also restore fairness to the rules that govern how courts
determine damages when a patent is infringed. The threat of excessive
damages is ruthlessly curtailing progress, and the loss of jobs and
innovation is directly linked to litigation costs.

Under today's rules, patent cases can be brought virtually anywhere in
the country... Our bill would prevent this gaming of the system by bringing
the standards for selecting venues in line with mainstream jurisprudence.

Limiting venue selection is a naked placation of serial patent infringers,
and utterly illogical. Certain districts in the country are favored for multiple
reasons, but particularly competence and efficiency. Patent litigation is
inherently complex. If you've been reading the
Patent Prospector, you know that
district courts often get it wrong, that the appeals court often corrects and
remands. You also know that 3-2 split CAFC rulings are common, with vigorous
dissent. Even the patent appeals court struggles with interpretation.
Rep. Darrell Issa (R-Ca), understanding the
problem, has proposed funding for training courts to better handle patent cases,
and mulled
patent trial courts as a means to avert ill-equipped district courts
frustrating patent enforcement. Yet frustrating patent enforcement is exactly
what the proponents of venue limits have in mind, and that these senators
support.

Another provision to clarify and limit use of the so-called inequitable
conduct defense would also bring balance to the patent system. This defense
is used to assert that the patent in question was obtained improperly and
is, therefore, invalid. It is frequently pled, and when it is misused, it
needlessly drives up the cost of litigation.

No statistics have ever been collated to demonstrate that inequitable conduct
accusations are excessive, or needlessly drive up the cost of litigation.
Anecdotal evidence in the
Patent Prospector
archives as often as not show that when there's the smoke of inequitable
conduct, there's fire, although it's sometimes hard to prove. Inequitable
conduct charges are readily pitched by courts now when there's no basis in fact
for them. The only reasonable basis for arguing that inequitable conduct
accusations should not be entertained is evidence that judges are generally
rubes, easily fooled; and there is Mt. Everest of evidence to counter such a
notion.

As legislators, we know we are headed in the right direction when
everyone is complaining that the entire bill is not going their way.

The above statement is preposterous. Legislation crafted to strengthen the
patent system and streamline attendant processes would encounter opposition from
vested interests, but would not engender complaints from "everyone,"
particularly the courts and patent bar. This legislation was drafted by an
anti-patent lobby and rubber stamped by craven senators happy to have their
pockets lined with lucre.

Gentlemen, allow me to introduce you to someone you don't know: Jack Shit.

Posted by Patent Hawk at February 15, 2008 2:02 AM
| The Patent System

Comments

Dear Pat and Orin
If you want to make seismic changes to the system, why not make changes that will improve it. Try these:

1. Set up a non-Article III IP trial court system, as is done with the tax system. Put IP lawyers on the bench. Get rid of the juries, unless you're willing to hire technical juries. Place one trial court in each federal circuit. Make claim construction a matter of fact, not reviewable de novo.

2. Set up an IP wing of the CAFC that hears all appeal from the IP trial courts. The only judges that go on that bench are those promoted from the trial bench.

3. Bring the TM system approach over to the patent side: allow a 90 day period for opposition of applications after publication, and then a 2 year period of contestibility after issue. After 2 years the patent is deemed virtually bullet proof.

4. Do like most of the world does and make the file wrapper off limits for litigation.

5. Pass a constitutional amendment keeping id1ots out of the PTO at all levels, but especially the very top and the very bottom.